mike p7獨(dú)立錄制私播完結(jié)版基礎(chǔ)課文字d3 pfi

TypeofProspectivefinancialProspectivefinancialinformationcanincludefinancialstatementsorTypeofProspectivefinancialProspectivefinancialinformationcanincludefinancialstatementsoroneormoreelementsoffinancialstatementsandmaybeprepared:asaninternalmanagementtool,forexample,toassistinevaluatingapossiblecapitalinvestment;orfordistributiontothirdpartiesin,forAnannualreporttoprovideinformationtoshareholders,regulatorybodiesandotherinterestedAdocumentfortheinformationmayinclude,forexample,cashflowinformationbasedabouteventsthatoccurinthefutureandpossibleactionsbytheentity.Auditorsareregularlyengagedtoprovideassuranceonprospectivefinancialinformation.toconsiderbeforeacceptinganengagementtoreportonprospectivefinancialinformationtoconsiderbeforeacceptinganengagementtoreportonprospectivefinancialinformationic-Threat&ic-Threat&Thereviewwouldconstituteanon-auditserviceprovidedtoanauditedentity,andCodeofEthicsstatesthatthismaypromotingtheclient’spositiontotheThereviewengagementshouldonlybeprovidedifsafeguardscanbeusedtoreducethethreattoanacceptablelevel,whichmayinclude:?Discussingethicalissueswiththosechargedwithgovernanceoftheclient.Usingseparateteamstoworkontheauditandonthereviewengagement.?etenceandetenceandtimeThefirmshouldalsoconsiderwhethertherearestaffavailablewithappropriateskillsandexperiencetoperformthereviewengagement,andthedeadlinebywhichtheworkneedstobecompleted.tobeincludedtobeincludedintheSpecifictermsoftheengagement-Thefirmwillneedtoclarifywhetherthebankhasrequestedatobeissued,andincludedintheapplicationtothewill???forecaststatementofprofitorlossforecaststatementofcashflowsaccompanyingnarrative,includingkeyndedIntendedusendedIntendeduseoftheinformation-whetheritisforgeneralorlimiteddistribution.Ifitsreportwillbeinconnectionwithbankfinance,thisshouldbeconfirmedbeforeacceptingtheengagement.od&Keyod&KeycoveredbytheprospectivesusedshouldalsoTheauditorshouldnotacceptanengagementwhentheassumptionsusedareclearlyunrealisticExaminationExaminationExaminationTheExaminationTheforecastshouldbecasttoconfirmAgreementthattheaccountingpoliciesusedinpreparingtheforecastareconsistentwiththoseusedinhistoricalfinancialinformationandcomplywithReviewanyotherinformationtoaccompanytheforecastforconsistencyExaminationManagement'sExaminationManagement'sassumptionsonwhichthePFIisbasednotAnalyticalreview-trendinAnalyticalreview-compositionofoperatingFinancecostLevelLevelofassuranceLevelofassuranceDuetothenatureofPFI,theauditfirmwillbeunabletoconcludeonwhethertheresultsLevelofassuranceDuetothenatureofPFI,theauditfirmwillbeunabletoconcludeonwhethertheresultsforecastwillbeachieved.Alsotheremaybeinsufficientevidenceavailabletoconcludethattheassumptionsarefreefrommaterialmisstatement.Therefore,theauditfirmcangenerallyonlyprovideaTheauditfirmwillnormallyprovidenegativeassurance.Thismeanstheywillstatethat‘nothinghascometotheirattention’whichcausesthemtobelievethattheassumptionsarenotareasonablebasisfortheforecast.March2020Q3March2020Q3YouareamanagerinMoritz&Co,afirmofCharteredCertifiedAccountantswhichoffersarangeofservicestoauditandnon-auditclients.YourfirmhasbeenaskedtoconsiderapotentialengagementtoforLavenzaCo,whichisofyourfirm.Moritz&CohasregulationssatisfactoryLavenzaCohasapproachedyourfirminordertoobtainanindependentassuranceopiniononacashflowforecastwhichisbeingpreparedforitsbankersinsupportofanapplicationforanincreaseinitsexistingoverdraftfacility.ThefollowingcashflowforecasthasbeenpreparedbyLavenzaCoLavenzaLavenzaCocashflowforecastforthe12monthsending30JuneThefollowinginformationThefollowinginformationisalso1.LavenzaCoisaretailerofacademictextbookswhichitsellsthroughitsownnetworkofbookshopsandonlinethroughitswebsite.Therevenuefromthewebsiteincludesbothcashsalesandsalesoncredittoeducationalinstitutions.Thecompanyhasprovidedindicatingthatforsalesmadeoncredit,10%payinthemonthofthesale,62%after30days,16%after60days,8%after90daysandtheremainderareirrecoverabledebts.2.LavenzaCoreceivesfromitsprincipalof8%ifitpayswithin14daysofreceiptoftheinventory.Itiscompanypolicytomaketheearlypaymentwhereverpossible.Ifthecompanypaysafter45days,itincursalatepaymentpenaltyof5%.3.Thecompanyalready3.Thecompanyalreadyhasanestablishedpresenceinlargecitiesuniversitiesbuthasseeninitscoreoperationsinrecentwhichhasledtoadecreaseinrevenueandafallinliquidity.Inordertoreversethesetrends,thecompanyisplanningtoextenditsoperationsbyopeningnewshopsinsmallcitieswithuniversitiesandlargecolleges.4.LavenzaCo’smanagementisplanninganonlinemarketingcampaigntargetedattheuniversitysectorwhichtheybelievewillincreasethecompany’smarketsharebyapproximately3%.5.ThecompanyhasanexistingoverdraftfacilityofbankersandhasrequestedanwithExplaintheExplainthematterstobeconsideredbyMoritz&CobeforeacceptingtheengagementtoreviewandreportonLavenzaCo’sprospectivefinancialinformation;and(6marks)AssumingMoritz&Coacceptstheengagement,recommendtobeperformedinrespectofLavenzaCo’scashflowforecast.(9marks)wer-wer-(i)MatterstoconsiderbeforeacceptingthereviewBeforeacceptingthereviewengagementtoreviewandprovideanassurancereportonLavenzaCo’scashflowforecast,ISAE3400TheExaminationofProspectiveFinancialInformationidentifiesanumberofmatterswhichneedtobeconsidered:Moritz&Comustconsider,forexample,whetherthecashflowforecastandassurancereportwillbeusedsolelyforthepurposeoftheincreaseinLavenzaCo’soverdraftfacility.IfLavenzaCoisplanningtousetheassurancereportforpurposesotherthananextensiontoitscurrentoverdraft,forexample,toarrangenewloanfinancefromthecompany’sbank,thismustbemadecleartoMoritz&Co.Moritz&ConeedstoconsiderwhowillreceivethereportandpotentiallyrelyMoritz&Coneedstoconsiderwhowillreceivethereportandpotentiallyrelyuponitasthiswillimpactonthefirm’sassessmentoftheriskassociatedwiththeengagement.Ifthecashflowforecastisintendedforgeneraldistribution,thiswillincreasethelevelofriskforMoritz&Coasalargeraudiencewillrelyonit.Inthistheinformationwillbeusedsolelyinsupportofapplicationtothebankandwillnotbemadeavailabletootherparties,thisshouldbeconfirmedbeforeacceptingtheengagementandwillreducetheriskoftheassignment.Moritz&Comustalsoconsidertheperiodcoveredbythecashflowforecastandthekeyassumptionswhichhavebeenusedinitspreparation.Short-termforecastsarelikelytobeeasiertoverifyandprovideassuranceonthanlongertermprojections.ISAE3400statesthataprospectiveMoritz&Comustalsoconsidertheperiodcoveredbythecashflowforecastandthekeyassumptionswhichhavebeenusedinitspreparation.Short-termforecastsarelikelytobeeasiertoverifyandprovideassuranceonthanlongertermprojections.ISAE3400statesthataprospectivefinancialinformation(PFI)whentheassumptionsusedinitspreparationareclearlyunrealisticorwhenthepractitionerbelievesthatthePFIwillbeinappropriateforitsintendeduse.InthecaseofLavenzaCo,althoughtheforecast,theratesassumedinrelationtoitsoperatingcashreceiptsmay,forexample,bejudgedgivenrecenttrendsinitsbusinessandtherequestedoverdraftfacility$17millionforthenextsixmonthsmayprovetobeMoritz&Cowillneedtoconsiderthespecifictermsoftheengagement,thelevelofassurancebeingsoughtbyLavenzaCoandtheformofthereportrequiredbythebank.Moritz&Moritz&Cowillneedtoconsiderthespecifictermsoftheengagement,thelevelofassurancebeingsoughtbyLavenzaCoandtheformofthereportrequiredbythebank.Moritz&Cowillneedtoidentifyclearlywhichitisaskedtoreporton–forexample,isitbeingaskedtoreportonthecashflowforecastonlyoristhefirmalsobeingaskedtoreportonaccompanyingnarrativeorotherPFI.Duetotheuncertaintyofforecastsandtheinevitablesubjectivityinvolvedintheirpreparation,Moritz&Cowillneedtoastowhethermanagement’sassumptionsprovideareasonablebasisforthecashflowforecastandtogiveanopinionastowhetheritisproperlypreparedonthebasisoftheseassumptions.ThefirmThefirmneedstoconsiderwhetherithassufficientstaffavailablewiththeappropriateskillsandexperienceneededtoperformthePFIengagementforLavenzaCo.Moritz&Coshouldalsoconsiderwhetheritcanmeetthedeadlineforcompletingtheworkandwhetheritwillhaveaccesstoallrelevantinformationandclientstaff.Giventhecompany’spredictedneedforcashinthenextsixpresumablytheextendedoverdraftfacilitywillneedandthismayleadtoMoritz&CotightreportingtomeetISQC1QualityISQC1QualityControlforFirmsthatPerformAuditsandReviewsofFinancialInformation,andOtherAssuranceandRelatedServicesEngagementsrequiresMoritz&CorelationtotheacceptanceInparticular,thefirmshouldconsidermanagement’sreasonsforappointingadifferentfirmfromitsauditorsandthepotentialformanagementbiasinthepreparationofacashflowforecastinsupportofitsrequiredoverdraftfacility.InadditiontothemattersidentifiedbyISAE3400andISQC1,Moritz&CoshouldalsoconsiderthefollowingethicalmattersbeforeacceptingthereviewGiventhatMoritz&Coarenottheauditors,thefirm’sGiventhatMoritz&Coarenottheauditors,thefirm’sindependencefromLavenzaCowillnothavebeenpreviouslyconsidered.Inthisregard,itisimportanttoensurethattherearenothreatstothefirm’sobjectivitywhichmightpreventitfromacceptingtheappointment.Ifthefirmisnotindependentanditsobjectivityiscompromised,thereliabilityoftheassurancereportwillbeMoritz&CoshouldalsoconsiderwhytheauditorshavenotbeenaskedtoprovidetheassurancereportonLavenzaCo’scashflowforecast.InordertoprovideanassurancereportonPFI,agoodunderstandingoftheclientanditsbusinessisrequiredandtheincumbentauditfirmwillusuallyhavetherequisiteknowledgeandunderstanding.Moritz&Coshouldthereforeconsiderwhethertheuseofadifferentfirmcreatesariskthattheclientmaybehopingthatthefirmmaynotbeinapositiontoeffectivelychallengethekeyassumptionsunderlyingthepreparationoftheforecast.Whenaprofessionalaccountantisaskedtoperformworkforanon-auditclient,theyshouldbegivenpermissionbytheclienttocontactitsauditorsinordertoobtainrelevantinformation.Ifthispermissionisnotgiven,theappointmentshouldbedeclined.Overall,Overall,Moritz&Comustassesstherisksassociatedwiththereviewengagementandshouldnotacceptanengagementwhentheassumptionsareclearlyunrealisticorwhenthefirmbelievesthattheprospectivefinancialinformationwillbeinappropriateforitsintendeduse.kkUpto1markforeachmatter–IntendeduseofthecashflowDistributionofthePeriodcoveredbythecashflowforecastandkeyassumptionsScopeoftheResourcesandClient–Ethicalmattersr-Examinationr-Examinationproceduresoncashflow??CastthecashflowforecasttoconfirmitsmathematicalConfirmtheconsistencyoftheaccountingpoliciesusedinthepreparationoftheforecastfinancialstatementswiththoseusedinthelastauditedfinancialstatementsAgreetheopeningcashpositionof$9,193,000tothecashbookandthebankstatement.Assessthecompetenceandexperienceoftheprepareroftheforecast.Reviewtheoutcomesofpreviousmanagementforecastsandassesstheiraccuracycomparedtoactualdata.??r-Examinationproceduresoncashflow?Discussther-Examinationproceduresoncashflow?Discusstheunderlyingthepreparationoftheforecastthepredictedgrowthratesinoperatingcashreceiptsof13·4%overtheyearcomparedtoanequivalentgrowthrateofonly7·3%inoperatingcashpayments.thestatedcollectionandpaymentperiodsinrelationtoreceivablesandpayables.confirmthatofthe?onthecashflowforecastbyvaryingthe(inparticular,inrelationtogrowthratesandpaymentperiods)assessingtheimpactofthesevariationsonthecompany’sforecastcash?oftheir&Co.frommanagementconfirmingthereasonablenessandthatallrelevantinformationhasbeenprovidedtor-Examinationproceduresoncashr-Examinationproceduresoncashflow?Agreethesettlementdiscountof8%andthelatepaymentpenaltyof5%penaltytermswithsupplierstosupportingcontractualdocumentation;agreetopurchaseledgerpaymentsinordertoconfirmthatdiscountsaretakenandpenaltiesarepaid.Agreethepredictedcollectionandpaymentperiodstothemostrecentsalesledgersandpurchaseledgers.Agreethesalarypaymentstothelatestpayrollrecordsandcashbookpaymentsanalysestoconfirmaccuracyandcompleteness.Obtainandreviewabreakdownoftheforecastoverheadpaymentsandcompareittohistoricalmanagementaccountsandcurrentbudgets.Reviewthescheduleto????Reviewboardminutesfordiscussionofthenewshopsandthemarketingr-Examinationproceduresoncashr-Examinationproceduresoncashflow?Requestconfirmationfromthebankofthepotentialtermsoftheadditionalfinancebeingnegotiated,toconfirmtheinterestrate.Considerwhetherthefinancechargeintheforecastcashflowappearsreasonable.??withthepreparerofforecast,forexample,LavenzaCo’scashflowforecastdoesnotincludefinancecosts,taxpaymentsanddoesnotincludeanycapitalexpenditureotherthanthenewshops.AnalyticallyAnalyticallyreviewtheforecasttrendsincashflowscomparingwiththemwithhistoricalcashflowstatementsandotherforecastdatawhichisavailableforthesectorandlocaleconomyandinvestigateanysignificantdifferences.Recalculatethepatternsofcashflowsbasedonmanagement’shistoricalanalysisofcreditsalestoconfirmthattheforecasthasbeenproperlypreparedonthebasisoftheseassumptions.Forasampleofoverheadcosts,reviewthesupportingdocumentationsuchasinvoicesandutilitybillsandagreetheamountpaideachmonthtothecashbook.Obtainandreviewbudgetsandanalysesofcoststodateforthenewshopsandtheonlinemarketingcampaignensuringthattheforecastincludesallofthebudgetedcostsanddoesnotincludeanycostswhichhavealreadybeenincurred.Agreeasampleofcoststosupportingdocumentationsuchasinvoices,quotationsandleaseagreements.Sep2018Q3Sep2018Q3-YouareanauditmanagerinJansen&CowhichoffersarangeofandotherassuranceservicestoitsNarleyCowhichoperatesacommercialhaulagecompany.NarleyCohasbeenanauditclientforthelastfiveyearsandiscurrentlyplanningasignificantexpansionofitsoperationsintoanewgeographicalareaandjurisdiction.Inordertofinancetheplannedexpansion,NarleyConeedsfundstopurchaseadditionalheavygoodsvehicles,expanditswarehousingfacilitiesandrecruitmoredrivers.Thecompanyisalsoplanningamajoradvertisingandmarketingcampaigntargetedatpotentialcustomersinthenewjurisdiction.NarleyNarleyCo'sfinancedirector,SuzanneSeddon,hasapproachedyoutoaskifyourfirmwillprovideareportontheprospectivefinancialinformationwhichhasbeenpreparedinsupportofaloanapplication.Theapplicationisforanewlong-termloanof$22millionfromthecompany'scurrentlenderwhichitintendstouseexclusivelytofinancetheplannedexpansion.Thecompanycurrentlyhasanexistinglong-termloanof$31millionfromthesamebankwhichisredeemableinfiveyears’time.SuzanneSeddonhasprovidedyouwiththefollowingextractfromtheprospectivefinancialinformationwhichwillformpartofthecompany’sloanapplication:ForecaststatementsofprofitorForecaststatementsofprofitor(104,862(22,936(1,450(124,786(21,984(1,638(157,230(20,743(1,597AdminexpensesOperatingprofitFinancecostsProfitbefore1234Revenuerepresentstheamountsderivedfromtheprovisionofhaulageservicestocommercialcustomersoperatingprincipallyintheretailsector.Revenuerepresentstheamountsderivedfromtheprovisionofhaulageservicestocommercialcustomersoperatingprincipallyintheretailsector.NarleyCo’sboardofdirectorsbelievesthattradeinbothitsexistingandnewmarketswillexperiencesignificantgrowthoverthenexttwoyears.Costofsalescomprisesthecostsofwarehousinganddistributionincludingrelevantstaffcosts,maintenanceandrepairofvehiclesanddepreciationofproperty,equipmentandvehicles.AdministrativeexpensesaremainlythecostsofrunningNarleyCo’scentralheadofficefacility.Financecostsrepresentthecostofservicinglong-termfinancefromNarleyCo’sbankers.ExplainthematterswhichExplainthematterswhichshouldbeconsideredbyJansen&CobeforeacceptingtheengagementtoreviewandreportonNarley(6AssumingJansen&Coacceptstheengagement,recommendexaminationprocedurestobeperformedinrespectofNarleyforecaststatementsofprofitor(9wer-Matterstobewer-MatterstobeWhenconsideringacceptanceoftheengagementtoreviewNarleyCo’sprospectivefinancialinformation(PFI),Jansen&Comustconsidertoperformtherepresentsanon-assuranceserviceandIESBACodeofEthicsforProfessionalAccountants(theCode)states.Anadvocacythreatariseswhentheauditorisaskedtopromoteorrepresenttheirclientinsomeway.Inthissituationthereisariskoftheauditorbeingseentopromoteinterestsoftheclientwithathirdpartysuchas.Asaresult,isadangerthattheauditorwillbebiasedinfavouroftheclientandthereforecannotbefullyobjective.AcceptingtheassignmentmayAcceptingtheassignmentmayalsocreateasresultoftheauditorbeingperceivedtohaveaninterestintheoutcomeofnegotiationswithathirdpartyandwhichmaymotivatetheauditortobehaveinordertoprotectthatinterest.Amayalsoarisebecausethenegotiationsmayinfactsandamountswhichwillformpartoftheauditedfinancialstatements.Asaresult,theauditorwillbeauditingfinancialstatementswhichinpartatleastrepresentworkwhichtheythemselveshaveperformed.Itfollowsthatthereisariskthattheauditorwillnotbesufficientlyobjectiveinperformingtheauditandmayfailtoidentifyanyshortcomingsintheirownwork.InthecaseofNarleyCo,InthecaseofNarleyCo,appearstobeastheauditfirmcouldbeseentobepromotingtheinterestsoftheauditclienttothebank.Theauditorshouldthereforeonlytheengagementifcanbeputinplacetomanagethreattoindependencetoanacceptablelevel.Potentialsafeguardsmightincludethefollowing:?TheuseofseparateteamsofsuitablyexperiencedstafffortheauditandthereviewofthePFI;IndependentseniorreviewofthePFIworkingDiscussionofthepotentialethicalissuesandthreatstoauditorindependencewiththosechargedwithgovernanceatNarleyCo.??Itshouldbenoted,however,thatitwouldnotbepossibletomanageasignificantadvocacythreatthroughsuchsafeguardsandinsuchacasetheappointmentshouldnotbeaccepted.ISAE3400TheExaminationofProspectiveFinancialInformationprovidesfurtherguidanceontheissuesISAE3400TheExaminationofProspectiveFinancialInformationprovidesfurtherguidanceontheissueswhichtheauditorshouldconsiderbeforeacceptinganengagementtoexaminePFI.AccordingtoISAE3400,theauditorshouldconsideramongstotherthings:?oftheinformation–forexample,whetheritwillbesolelyforthepurposeoftheproposedloanWhethertheinformationwillbe?–auditorneedstoconsiderwhowillreceivethereportandpotentiallyrelyuponTheelementstobeincludedintheinformation–Jansen&ConeedstoclarifytheexactcontentofthePFIwhichtheyarebeingaskedtoreporton,forexample,whetheritonlyincludestheforecaststatementsofprofitorlossorwhetheritalsoincludesforecaststatementsoffinancialpositionandforecastcashflowstatements;and??Thenatureoftheassumptions,thatis,whethertheyarebest-estimate?Thenatureoftheassumptions,thatis,whethertheyarebest-estimateorhypotheticalassumptions–inthiscaseitseemslikelythattheywillbebestestimateassumptionsasNarleyCoexpectstoobtainfinanceinordertofunditsplannedexpansion;–shortertermforecastsarelikelytobemorereliablethanprojectionsoveralongerperiod.Jansen&ComustalsoconsiderwhetherthefirmhasJansen&Comustalsoconsiderwhetherthefirmhassufficientstaffavailablewiththeappropriateskillsandexperiencetoperformthereviewengagementinlinewiththeclient’srequiredreportingdeadlines.Overall,theauditormustassesstherisksassociatedwiththereviewengagementandshouldnotacceptanengagementwhentheassumptionsareclearlyunrealisticorwhentheauditorbelievesthattheprospectivefinancialinformationwillbeinappropriateforitsintendeduse.kMatterskMatterstobeconsideredbeforeacceptanceofengagementUpto2marksforeachmatterexplained:–Auditorindependenceincludingpotentiallysignificantadvocacyandself-interestthreats–Intendeduseofreport,e.g.solelyforbankorwiderandpossibleself-–Natureofassumptionsandtimeperiodcovered(inthiscasetwoAvailabilityofexperienced,competentstaffandtimeframeforassuranceAppropriatesafeguardstoreduceriskstoacceptableDetailsofPFItobegiventobank,e.g.forecastP/LonlyMaximummarks6werExaminationprocedureswerExaminationprocedurestobeThearithmeticaccuracyoftheforecaststatementsofprofitorlossshouldbeconfirmed;ConfirmationthattheaccountingpoliciesusedintheforecaststatementsareconsistentwiththoseusedintheauditedfinancialstatementsandthattheycomplywithIFRS;Thecompetenceandexperienceoftheclientstaffwhohavepreparedtheforecastsshouldbeassessed;theassessmentshouldincludetheaccuracyofPFIwhichhasbeenpreparedinpreviousperiodsandthereasonsforanysignificantvariancescomparedtoactualoutcomes;werExaminationprocedurestowerExaminationprocedurestobeDiscussthekeyassumptionswhichhavebeenmadebytheclientinthepreparationoftheforecaststatementswithmanagementassessingtheirreasonablenessandconsistencywiththeauditfirm’scumulativeknowledgeandunderstandingoftheclient;Performanalyticalreview,followedbydiscussionwithmanagementtoseekcorroboratingevidenceofkeytrendsandratiosincluding:Growthinrevenue(26%from20X8to20X9;29%from20X9toCostofsalesasapercentageofrevenue(75·5%in20X8;71·3%in20X9;69·7%inThedecliningtrendinadministrativeexpenses(decreaseof4·2%from20X8to20X9;5·6%from20X9to20Y0)Theincreaseinthenetprofitmargin(6·9%in20X8;15·2%in20X9;20·4%inObtainawrittenrepresentationfrommanagementconfirmingthereasonablenessandcompletenessoftheassumptionstheyhavemadeinpreparingtheforecasts;????werExaminationprocedurestowerExaminationprocedurestobeObtainandreviewabreakdownofoperatingexpensesinordertoensurethatallitemshavebeenappropriatelyincluded,forexample:advertisingandmarketingcostsforthecampaigninthenewjurisdiction;additionalstaffcostsforthenewdriversincludingrecruitmentexpenses;anytradingtariffsrelevanttooperatinginthenewmarketandanyforeigncurrencyandexchangeimplications;ObtainandreviewthesupportingdocumentationforNarleyCo’sexistingloanagreementswiththebankaswellasthedraftdocumentationforthenewloan;recalculatedandagreedtotheforecastshouldwerExaminationprocedurestobe–ReviewwerExaminationprocedurestobe–ReviewofmarketresearchdocumentationinNarleyCo’smarketsandthenewmarketanddiscussitwithmanagementtoassesswhetherthegrowthpatternsbeingforecastinrevenuerepresentreasonableandrealisticexpectations;–Obtaincopiesofanynewcustomercontractsforexistingandmarketstoconfirmthereasonablenessoftheprojectedgrowthin–RecalculationofdepreciationtoensurethecorrectinclusiondepreciationonthenewHGVsandwarehousingfacilitieswithintheforecaststatements;–RecentutilitybillsshouldbeinspectedandanassessmentofreasonablenessofforecastutilityoverheadsshouldbeJuneJuneRequired:CriticallyappraisetheproposedassurancereportextractofTulipCo.(8marks)Note:YouareNOTrequiredRequired:CriticallyappraisetheproposedassurancereportextractofTulipCo.(8marks)Note:YouareNOTrequiredtore-drafttheassuranceYouarereviewingthedraftassurancereportinrelationtotheexaminationofaforecastforTulipCo.TheforecastisincludedinaproposalduetobesenttoTulipCo’slendersaspartofanefforttosecureanewloan.Auditproceduresconcludedthatthereisnoreasontobelievethattheforecastisunrealisticorthatithasnotbeenproperlyprepared.Youarecurrentlyreviewingthedraftassurancereport,whichisprovidedbelow:Independentauditor'sIndependentauditor'sreportontheforecastofTulipWehaveexaminedtheforecastinformationofTulipCocontainedintheloanproposalinaccordancewiththerelevantstandardsonassuranceengagementsapplicabletotheexaminationofprospectivefinancialinformation.Thyme&Coisnotresponsiblefortheforecast,includingtheassumptionsonwhichitisbased.Basedonourexaminationoftheevidencesupportingtheassumptions,webelievethattheseassumptionsprovideareasonablebasisBasedonourexaminationoftheevidencesupportingtheassumptions,webelievethattheseassumptionsprovideareasonablebasisfortheforecast.Further,inouropiniontheforecastisproperlypreparedonthebasisoftheassumptionsandispresentedinaccordancewithIFRS.Actualresultsarelikelytobedifferentfromtheforecastsincetheassumptionsonwhichtheforecastisbasedareunlikelytobeaccurate.Signedbyassuranceengagementpartner,Thyme&11ThereportiscurrentlyaddressedtotheshareholdersofTulipCowhichisnotappropriate.Theintendedusersforthereportaremorelikelytobetheboardofdirectors,whowishestouseitinconjunctionwithaloanapplication,andthereportshouldbeaddressedassuch.2Type2Typeofforecast-Thereportfailstospecifywhatforecasttheassurancerelatesto.Companiescanforecastvariouselementsoffinancialperformance,positionandcashflow.Itisvitaltoidentifyspecificallywhichforecast,andwhichelementsoftheforecast,arecoveredbytheassurancereport.SpecificdocumentandpageTheassurancereportsimplyreferstotheforecast‘containedintheloanproposal’.Thisisnotspecificenough.Thisincreasestheriskthatthesameforecastcanbereissuedwiththeassurancereportinotherloanproposals.Theassurancereportshouldstatethetitleofthedocumenttheforecastisincludedinandthepagenumbersuponwhichassuranceisbeingprovided.33ResponsibilityforRatherthanstatingthatthepractitionerisnotresponsibleforthepreparationoftheforecast,ISAE3400specifiesthattheassurancereportshouldstatethatmanagementisresponsiblefortheinformationprovidedandtheassumptionsuponwhichitisbased.TheassuranceprovidedinthedraftassurancereportiswordedpositivelyTheassuranceprovidedinthedraftassurancereportiswordedpositively;ISAE3400requiresthatforanexaminationofprospectivefinancialinformationastatementofnegativeassuranceisprovided.Foranunmodifiedreport,suchasthatpresentedinthedraft,thewordingusedshouldstatethat‘baseduponourexaminationoftheevidencesupportingtheassumptions,nothinghascometoourattentionwhichcausesustobelieve 5Inappropriate5InappropriateThecaveatattheendofthereportshouldberewordedasitsomewhatunderminesthecredibilityoftheforecastandtheassuranceprovidedbystatingthattheforecastisunlikelytobeAmoreappropriatestatementwouldrefertotheuncertaintyinrelationtothenatureofaforecastandthattheactualresultsmayvaryfromthoseanticipated.7ReferencetothepurposeanddistributionoftheItiscommonpracticeforarepor